Advice Wanted Regarding Saving Approximately £5000

wearethedogs

I am looking for somewhere to save around £5000, maybe a bit more (up to about £8000, I am not sure exactly how much I want to put away yet.) I am willing to tie the money down for up to five years, deffinitly three.

The MSE guide on savings suggests that the first place to put money should be a tax-free ISA, however, I am a bit confused, as aren't Index-linked savings certificates currently paying more interest? (The guide states 6.3%)

Also, I am not currently a tax payer. In September I will be starting work however, and earning 12500 PA, meaning that this tax year I will earn £7290 (before tax). Should this affect my decision of where to save my money?

Sceptic001

wearethedogs wrote: »

The MSE guide on savings suggests that the first place to put money should be a tax-free ISA, however, I am a bit confused, as aren't Index-linked savings certificates currently paying more interest? (The guide states 6.3%)

Index-linked certificates are a great product (especially for taxpayers as they are tax-free), but ignore the 6.3% figure quoted by MSE as it is simply wrong. Apart from the fact that it quotes an out-of-date RPI inflation rate, it refers to the return you would have received if you had invested more than a year ago. ILSCs have been discussed at length on various savings and investment threads and, unless inflation falls dramatically are a better bet than currently available one-year fixed rate bonds.